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The Kroger Co. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: December 15, 2011 08:46AM

The Kroger Co. (KR) filed Quarterly Report for the period ended 2011-11-05. Kroger Co. has a market cap of $13.72 billion; its shares were traded at around $23.55 with a P/E ratio of 12.1 and P/S ratio of 0.2. The dividend yield of Kroger Co. stocks is 2%. Kroger Co. had an annual average earning growth of 4% over the past 10 years. GuruFocus rated Kroger Co. the business predictability rank of 2-star.



Highlight of Business Operations:

For the third quarter of 2011, net earnings totaled $196 million, or $0.33 per diluted share, compared to $202 million, or $0.32 per diluted share for the same period of 2010. Our third quarter net earnings per diluted share for 2011 increased, compared to the same period in 2010, primarily due to the repurchase of our stock over the past four quarters. The decrease in our net earnings for the third quarter of 2011, compared to the third quarter of 2010, resulted primarily from an increase in our LIFO charge of $50 million and an increase in our effective income tax rate, offset partially by an increase in both our fuel and non-fuel operating profit, excluding the LIFO charge. For the first three quarters of 2011, net earnings totaled $909 million, or $1.50 per diluted share, compared to $838 million, or $1.30 per diluted share for the same period of 2010. Net earnings per diluted share increased in the first three quarters of 2011, compared to the first three quarters of 2010, due to increased net earnings and the repurchase of 67 million of our common shares over the past four quarters. The increase in our net earnings for the first three quarters of 2011, compared to the same period in 2010, resulted primarily from an increase in both fuel and non-fuel operating profit.

Net earnings of $0.33 per diluted share for the third quarter of 2011 represented an increase of 3.1% over net earnings of $0.32 per diluted share for the third quarter of 2010. Net earnings per diluted share increased in the third quarter of 2011, compared to the third quarter of 2010, due to the repurchase of 67 million of our common shares over the past four quarters. Net earnings of $1.50 per diluted share for the first three quarters of 2011 represented an increase of 15.4% over net earnings of $1.30 per diluted share for the first three quarters of 2010. Net earnings per diluted share increased in the first three quarters of 2011, compared to the first three quarters of 2010, due to increased net earnings and the repurchase of 67 million of our common shares over the past four quarters.

Rent expense was $146 million, or 0.71% of sales, for the third quarter of 2011, compared to $154 million, or 0.83% of sales, for the third quarter of 2010. For the year-to-date period, rent expense was $493 million, or 0.71% of sales in 2011, compared to $503 million, or 0.81% of sales, in 2010. The decrease in rent expense for both the quarter and year-to-date periods of 2011, when compared to the same periods of 2010, resulted primarily from a closed store reserve adjustment in the third quarter of 2010. Rent expense, as a percentage of sales excluding fuel, decreased 10 basis points in the third quarter of 2011 compared to the third quarter of 2010. Rent expense, as a percentage of sales excluding fuel, decreased 7 basis points in the first three quarters of 2011 compared to the first three quarters of 2010. These decreases in rent expense, as a percentage of sales both including and excluding fuel, primarily reflect our continued emphasis on owning rather than leasing, whenever possible, and the benefit of increased supermarket sales.

Net interest expense was $99 million, or 0.48% of total sales, in the third quarter of 2011 and $103 million, or 0.55% of total sales, in the third quarter of 2010. For the year-to-date period, interest expense was $334 million, or 0.48% of sales, in 2011 and $337 million, or 0.54% of sales, in 2010. The decrease in net interest expense for both the quarter and year-to-date periods of 2011, compared to the same periods of 2010, resulted primarily from a lower weighted average interest rate and debt balance, offset partially by a decrease in the benefit from interest rate swaps.

We generated $2.4 billion of cash from operating activities during the first three quarters of 2011, compared to $2.5 billion in the first three quarters of 2010. The cash provided by operating activities came from net earnings including noncontrolling interests, adjusted for non-cash expenses, and changes in working capital. Changes in working capital used cash from operating activities of $311 million in the first three quarters of 2011. Changes in working capital provided cash from operating activities of $444 million in the first three quarters of 2010. The decrease in positive cash flow generated by changes in working capital for the first three quarters of 2011, compared to the first three quarters of 2010, was primarily due to an increase in the use of cash for the purchase of inventories and an increase in prepaid expenses in the first three quarters of 2011, compared to a decrease in the first three quarters of 2010. The increase in prepaid expenses was primarily due to a decision not to pre-fund our voluntary employee benefit account at the end of fiscal year 2010 compared to a $300 million pre-funding at the end of fiscal year 2009.

Read the The complete Report



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